Positive earnings growth hasn't been enough to get Greenvolt - Energias Renováveis (ELI:GVOLT) shareholders a favorable return over the last year

Passive investing in an index fund is a good way to ensure your own returns roughly match the overall market. When you buy individual stocks, you can make higher profits, but you also face the risk of under-performance. For example, the Greenvolt - Energias Renováveis, S.A. (ELI:GVOLT) share price is down 23% in the last year. That's well below the market decline of 1.1%. Greenvolt - Energias Renováveis hasn't been listed for long, so although we're wary of recent listings that perform poorly, it may still prove itself with time. On the other hand the share price has bounced 6.2% over the last week.

While the last year has been tough for Greenvolt - Energias Renováveis shareholders, this past week has shown signs of promise. So let's look at the longer term fundamentals and see if they've been the driver of the negative returns.

See our latest analysis for Greenvolt - Energias Renováveis

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

Even though the Greenvolt - Energias Renováveis share price is down over the year, its EPS actually improved. It's quite possible that growth expectations may have been unreasonable in the past.

The divergence between the EPS and the share price is quite notable, during the year. So it's well worth checking out some other metrics, too.

Greenvolt - Energias Renováveis' revenue is actually up 53% over the last year. Since the fundamental metrics don't readily explain the share price drop, there might be an opportunity if the market has overreacted.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

We know that Greenvolt - Energias Renováveis has improved its bottom line lately, but what does the future have in store? You can see what analysts are predicting for Greenvolt - Energias Renováveis in this interactive graph of future profit estimates.

A Different Perspective

We doubt Greenvolt - Energias Renováveis shareholders are happy with the loss of 23% over twelve months. That falls short of the market, which lost 1.1%. That's disappointing, but it's worth keeping in mind that the market-wide selling wouldn't have helped. It's great to see a nice little 5.5% rebound in the last three months. Let's just hope this isn't the widely-feared 'dead cat bounce' (which would indicate further declines to come). It's always interesting to track share price performance over the longer term. But to understand Greenvolt - Energias Renováveis better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with Greenvolt - Energias Renováveis (at least 2 which don't sit too well with us) , and understanding them should be part of your investment process.

Of course Greenvolt - Energias Renováveis may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Portuguese exchanges.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.